Dell looks set to join Intel in announcing massive layoffs of up to 10% of its workforce. The news comes via Bloomberg, with PCMag giving a figure of around 12,500 affected employees. The big players in the tech industry are at times notorious for churning through employees, and Dell's layoffs were described as a "bloodbath" by former employee Ian Armstrong, and the company has cut around 25,000 jobs in the past year.
Why is this happening? According to an internal Dell memo, executives "aim to grow faster than the market by seamlessly meeting our customers and partners online, virtually, or in person to unlock the value of modern IT and AI for their organizations". This means massive cuts and restructuring to the existing sales teams, which have seen a decline in home PC sales, with a pivot to focus on data center and AI-related sales.
There's been a lot of hype around AI over the past year or two, but generative AI has yet to show increased profits and improved productivity. With many companies spending billions on supercomputers to power their AI training and research, so far the major beneficiaries have been the companies producing the hardware, like Nvidia. A study cited by Forbes in late July had 77% of employees voicing that AI has only increased workloads and hampered productivity. Earlier this week, Business Insider also reported a pharma company canceling a Copilot AI deal, citing high cost, low value, and "middle-school" presentations.
Dell of course wants to be one of the providers of AI hardware. Besides selling Copilot enabled laptops, it also sells a lot of server hardware used in data centers. It's not alone in that desire, however, and faces plenty of competition. Merging sales teams to better focus on a narrower market could prove successful, but that remains to be seen.
It's always unfortunate to see the livelihood of this many people in our industry be negatively impacted. However, it's important to be directly critical of the reasons why that happened, and whether or not they are truly justified. Some would argue that any mass layoffs are simply a failure of upper management refusing to cut executive pay, but there seem to be different motivations between Intel's layoffs versus the latest Dell cuts. Intel is currently trending at -43.5% stock value over the past year, while Dell is trending at +73.5%.
